Competition between VMware and Microsoft got a little tighter on Thursday with the release of Windows Server 2008 R2, which includes a major update to Microsoft's Hyper-V virtualization software.
VMware dominates the server virtualization market, but Microsoft hopes to change that with its new offering, Hyper-V R2. The update adds important capabilities that help Microsoft close the functionality gap with VMware and other rivals. But analysts still see the product falling short in a few areas required for running enterprise-class applications.
"They've got a lot of the basics covered if you are doing basic consolidation, but they are lacking a lot of the advanced use-case stuff like business continuity, resource optimization and VDI (virtualization desktop infrastructure)," said Gary Chen, research manager for enterprise virtualization software at IDC.
The next version of the product will likely address many of these issues, he said. In the meantime, Microsoft will try to exploit the advantages it has historically used to push its data center server products, including lower prices and a close tie-in with other Microsoft software. "They are definitely more competitive on pricing," Chen said.
Hyper-V R2 ships free with Windows Server 2008 R2, although to take full advantage of some of its more advanced capabilities customers will have to purchase System Center Virtual Machine Manager, which costs US$869 per physical server.
The new features include Live Migration, which allows virtual machines to be moved from one physical server to another without interrupting service. Hyper-V R2 can also take advantage of more powerful servers, with support for up to 64 physical processors, and allows virtual machines to be migrated between two servers based on the same processor family, such as AMD's Opteron chips.
In the end, the choice of which product to use may come down to whose vision customers most believe in for how the future of virtualization will play out.
Microsoft is counting on its belief that virtual servers ultimately won't account for more than 50 percent of a company's server infrastructure, with physical servers representing the rest. In this scenario, Hyper-V's ability to manage both physical and virtual servers may give it an edge over VMware, whose tools manage only virtual infrastructure.
Microsoft's idea of how virtualization gets deployed is fundamentally different from that of VMware, which sees customers running nearly all their servers, along with much of their storage and networking equipment, in a virtualized environment.
"While the competition may have had a head start on the hypervisor for the server, we always take the long-lead view and say, 'Where is this going to go?' " said Bob Kelly, corporate vice president of infrastructure server marketing at Microsoft.
In Microsoft's view, server sprawl -- where companies add extra physical servers that are needed for only brief periods of time -- is a logical and natural response to fears that key applications could be overwhelmed during periods of peak demand. Virtualization allows companies to increase server density, while still maintaining enough extra server capacity to handle peak loads, Kelly said.
"That's why I still maintain that at some point, you'll be at 40 percent to 50 percent virtualized and you're 50 percent physical, and that's an important thing to recognize. If you recognize that, you can set the strategy. It's not, 'Oh God, we thought the world was going to be only virtual.' That, fundamentally, is why I think VMware is in trouble," he said.
But the new version of Hyper-V still lags behind VMware's product in several ways and will not meet all the virtualization needs of larger companies, analysts said.
In a study released in September, Burton Group said Hyper-V R2 is missing two of the 27 features it considers essential for running enterprise-class applications in production: the ability to assign run priority to each virtual machine on a server, which determines the order in which they are restarted after a hardware failure, and support for multiple virtual CPUs when running Linux and Windows 2000 as guest operating systems.
"These limitations prevent the platform from meeting the production requirements of the typical large enterprise," Burton Group analyst Chris Wolf wrote in a recent report.
As a result, Hyper-V R2 will be attractive primarily to small and medium-sized businesses and for use at the departmental level, the report said. However, large companies that have "long-standing technology, business, and strategic investments in Microsoft products" may be willing to accept the absence of key features in Hyper-V R2 to avoid the cost of switching to Microsoft from another virtualization platform later, he wrote.
"We always try to be best in class in every category we're in," Kelly said. "Sometimes the other guy gets there a little bit ahead of us, so we're in the catch-up position. Sometimes we're ahead of the other guy and we're in the lead position. That's just the nature of this game."
While Microsoft works to match the functionality VMware offers today, VMware is laying the groundwork for what it sees as the next stage of virtualization, where companies deploy applications to a pool of virtualized servers in the cloud, and are then able to move those workloads back and forth between internal and external data centers.
It's an ambitious strategy and one that is not sure to pay off, given the concerns about security and reliability in the cloud among corporate CIOs. But it positions VMware for what could become an important use of virtualization in the future.
"If I'm a software development company and I want to unseat the guys at the top, what I have to do is see where the market is going and beat them there. [VMware President and CEO] Paul Maritz did that," Wolf said in an interview. "He said, 'The market is moving towards the cloud and I want to sew up as many cloud providers as I can before my competition does.' And they've done that by a high order of magnitude, with over a thousand service providers now in the VMware partner network. That's huge."
VMware believes it can hold on to its technical edge for the foreseeable future, even as Microsoft steps up its investments in virtualization.
"This is not something you can do given just programmers and time," said Andrew Dutton, VMware's general manager of Asia-Pacific and Japan. "This is technically really difficult code and hence the patents around it. The thought that someone is just going to come into the market and take this over just through desire ain't going to happen."
Nevertheless, Microsoft is going to try.
"It's obviously still very early in the market, no matter how much hype there is, no matter how much people think this game is over," Kelly said.
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